Canada’s airline business got a couple of seismic jolts this week as yet another showdown between arch rivals Gerry Schwartz, head of Onex Corporation and Air Canada CEO Calin Rovenescu looms but this time they’ll battle for market share, not corporate control. Onex bought WestJet early in the week and Air Canada is now in talks to take over Air Transat. Assuming the pundits are correct and the Air Canada deal goes through, the two giant airlines will take the gloves off in a turf war that will reshape the business in Canada.

It’s been 20 years since Air Canada fought off a hostile takeover from Schwartz thanks to Rovenescu, who led Air Canada’s legal strategy. At that time, Air Canada and Canadian Airlines were the two main carriers and both were in desperate financial straits. A lot has changed and the Onex deal puts WestJet in a position to take the gloves off with its nemesis. Onex is a private company and WestJet was shacked by shareholder concerns in its efforts to compete. As a private company it will have much more flexibility. While WestJet is smaller by an order of magnitude than Air Canada, it operates a lot of the same equipment and the two will clash on prized high-revenue international routes. WestJet just started flying its new 787-9s to Europe and the industry reviews are gushing about the front-cabin service, which Air Canada has invested heavily in over the last couple of years.

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